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POWERHOUSE
City Growth Tracker England’s South Coast Economy
“This Powerhouse update highlights some of the reasons as to why businesses and investors view the South Coast region as an attractive alternative to Inner London.” Hannah Clipston
Partner, Litigation, Southampton
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City Growth Tracker update England’s South Coast Economy
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Introduction The South Coast is known for being both vibrant and diverse; however it is the region’s significant growth potential for businesses in the next ten years that is attracting the attention of investors, entrepreneurs and corporates. There are, of course, numerous reasons for the regions significant growth potential, but without doubt, the rising cost of living and business rates in Inner London make the South Coast an attractive alternative place to live, work and invest. This report takes a closer look at seven cities on the South Coast, to understand what is driving their prosperity, how business and government are collaberating to develop the region, and most importantly how they are tackling the “productivity puzzle”1. Highlighting and examining the differences in relation to regional growth has been a key part of Irwin Mitchell’s UK Powerhouse initiative. It is also one of the big themes we will be exploring in 2017 in partnership with the CBI on their “Unlocking Regional Growth” campaign - something which we are proud to be associated with. Both of these influential studies not only demonstrate the economic disparities that exist across the UK, but they also highlight the huge opportunities that there are to boost prosperity by working together in a focussed way in order to drive regional growth.
CBI - “Unlocking Regional Growth” campaign
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Irwin Mitchell’s Powerhouse Tracker Official economic data sources for the UK’s cities are often dated. The last set of regional economic accounts corresponds to the economy in 2015. To more accurately estimate current economic activity, Cebr has utilised a range of more timely indicators to create a ‘nowcast’ of GVA* and employment for a range of key cities across the UK.
Contents Cities covered by this report Brighton Bournemouth Chichester Plymouth Portsmouth Southampton Winchester The next ten years for the region GVA* Growth Employment
*GVA: Gross Value Added (the value of goods and services produced)
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Key Facts (from the January 2017 UK Powerhouse Tracker) Quarterly GDP growth in the UK economy stood at 0.5% in Q3 2016, down from the 0.7% recorded in the second quarter of 2016. On an annual basis, output across the UK economy stood at 2.3%, higher in real terms than in Q3 2015. Cambridge and Milton Keynes topped the tables in terms of GVA growth, and Manchester, Oxford and Inner London saw faster growth in the third quarter due to the strength of business services. In Q3 2016, service industries performed strongly, growing by 0.8% on the previous quarter. However, output decreased in all three other main industrial groups: construction decreased by 1.1%, agriculture by 0.7%, and production was down 0.5%. Promisingly, trade contributed to third quarter GDP growth, as exports grew and imports were lower. The results of the latest interactive Powerhouse Tracker can be viewed at www.irwinmitchell.com/ukpowerhouse
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“As investors and developers increasingly look to the regions for opportunity and yield, our Powerhouse update explores some of the key economic drivers in prime South Coast locations to help inform and identify investment strategies and opportunities.” Guy Sackett
Partner, Real Estate, Chichester
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City Growth Tracker update England’s South Coast Economy
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Our update on the South Coast In recent years, the English South Coast economy has grown significantly, to become a thriving area for innovation and business opportunity. Of the seven South Coast economies in this report, the fastest growing city over the past three years has been Brighton. From Q4 2013 and Q4 2016, Brighton’s total economic output2 grew by 12.1%. Other parts of the region have also done well. A rising tech and financial hub, Bournemouth’s output grew by an impressive 9.3%. Both Southampton and Winchester also posted robust output growth, of 8.5% and 7.7% respectively. Creative clusters, which tend to have high levels of productivity3, are becoming a particular strength of the South Coast economy. Both Bournemouth and Southampton have seen especially strong job growth in specialised design, increasing 50% and 83% respectively from 2011 to 2016. Long established as a cosmopolitan centre, Brighton’s creative and design industries are also faring well, with standout growth in the number of architecture and engineering firms, increasing by 45% over the last five years.
Economic output is measured in Gross Value Added (GVA) and is the total value of new goods and services produced in a given area. 3 Geography of Creativity, 2016 2
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Brighton Brighton benefits from a professional and high-skilled workforce - over the past five years, there has been a sharp rise in the city’s business administration jobs (45%). Consequently, Brighton’s total business base expanded by 26% from 2011 to 2016 to over 13,000 firms, more than any other South Coast city in this report. Projects such as Platf9rm, a collaborative workspace provider, and Entrepreneurial Spark, a people accelerator providing six-month support programmes to entrepreneurs, put further wind in Brighton’s exciting economy. With a robust, highly-skilled and creative labour market, Brighton is set to grow by 21% over the coming decade.
Brighton Projects such as
Platf9rm put further wind in Brighton’s exciting economy.
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City Growth Tracker update England’s South Coast Economy
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Figure 1 Economic output growth of South Coast cities: annual growth in 2017 (left axis); cumulative 10 year growth to 2026 (right axis).
Source: Irwin Mitchell/Cebr analysis
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“The South Coast attracts both UK based entrepreneurs and wealth creators, irrespective of whether overseas or of UK origin. Offering one of the most neutral and entrepreneurial business environments in the world, and attracting a mix of individuals, families and their investment capital. Thereby facilitating growth of the South Coast economy and community.” Ursula Danagher
Partner, Head of Private Client and Private Wealth in the South East, London
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City Growth Tracker update England’s South Coast Economy
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Southampton The future is also bright in Southampton - no city in the UK saw a greater rise in jobs posted from between the Brexit vote and the end of November 20164. With businesses unfazed by post-Brexit uncertainty and keen to grow their workforce, annual job growth is set to reach 0.7% over 2017, well above the UK average of 0.4%. Southampton also has a strong business services sector, and at 23%, the joint-highest share of workers in professional occupations on the South Coast. Southampton’s Future Worlds centre is helping the city’s thriving start-up culture - the scheme helps turn ideas into market-ready investment opportunities, from augmented real-time technology for disaster response to solar-powered intranet for remote communities. Furthermore, the Solent Local Enterprise Partnership’s £26 million investment into the connectivity of the Solent Enterprise Zone will unlock new opportunities in the city.
Southampton
CV Library, 2017
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Portsmouth A leading South Coast export hub, Portsmouth is set to be the third fastest growing economy in the region over the coming decade, growing 18% in total. The city has a strong manufacturing and advanced engineering base, and is home to a range of large multinational companies such as BAE Systems and IBM, and a host of aerospace companies including Astrium EADS. While job growth has been modest over recent years, the high share of knowledge-based professions will help drive future growth, and Start-Up Portsmouth aims to support the city’s newest firms. Investment is also being targeted at transforming Portsmouth’s city centre and upgrading the city’s roads.
Portsmouth
The City has a strong manufacturing and advanced engineering base and is set to be the economy on the South Coast over the coming decade. 12
City Growth Tracker update England’s South Coast Economy
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Figure 2 Employment growth of South Coast cities: annual growth in 2017 (left axis); cumulative 10 year growth to 2026 (right axis).
Source: Irwin Mitchell/Cebr analysis
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Bournemouth Bournemouth’s economy has undergone rapid development in recent years to become one of the UK’s top 10 tech clusters5, renowned for digital marketing app and software development. The city’s 14,000 digital tech workers were worth £350 million to the local economy in 2016. The finance industry is also fast becoming the city’s economic engine room. Boosted by the presence of JP Morgan, employing more than 4,000 people at its tech and operations centre, 23% of Bournemouth’s workforce is employed in finance, banking and insurance – the highest proportion of any South Coast city.
Quarterly GDP growth in the Bournemouth UK economy stood at 0.5% in
has a top 10 tech cluster Q3 2016, down from the 0.7% and is known for recorded in the second quarter
of 2016. On an annual basis, output across the UK economy app and software development. stood at 2.3%, higher in real terms than in Q3 2015.
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City Growth Tracker update England’s South Coast Economy
TechNation, 2016
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POWERHOUSE
Winchester Winchester, declared the best place to live in Britain last year6, is a sought-after destination for both tourists and professionals. With a recent scheme to boost shared homeownership, housing demand is strong, and job growth in the construction industry expanded 78% in the past year. With the current attraction of British ‘staycations’, Winchester’s already-strong tourism sector is likely to grow further this year. Consumer demand is also strong, the unemployment rate is well below the UK average, and gross weekly earnings were 27% higher than the UK average in 2016.
Winchester has a strong tourism sector which is likely to grow as people opt for Sunday Times, 2016
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Chichester The cathedral city of Chichester has seen positive growth in recent years, boosted by infrastructure spending along the A27 and rapid development in the transport and communication industry. Green shoots are starting to appear in Chichester’s agriculture sector - effective funding, including a £6 million investment from Vitacress to create the UK’s first fresh herbs facility in 2016, has helped job growth in the industry. Chichester has seen the strongest job expansion over the past three years across the South Coast at 16%, and second-lowest unemployment rate, at 3.3%, after Winchester.
Chichester Second lowest unemployment rate at
after Winchester.
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Plymouth The economy of Plymouth has underperformed compared to other South Coast economies, but well-targeted investment is likely to help drive growth. While employment has expanded by 8% in the last three years, GVA growth has totalled just 3%. The city’s new £13 million science hub, opening in September 2017, should provide new opportunities for the city’s growing technical workforce. Plymouth’s tourism industry is also gaining momentum, and a £226 million investment programme to transform the city centre may provide the inspiration for Plymouth to emulate the successes seen in other local economies across England’s South Coast.
Plymouth
A new science hub is due to open in September 2017 with a £13 million investment; along with a
programme to transform the city centre. @irwinmitchell
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Powerhouse Table – The Year Ahead GVA GVA Q4 2017, £millions
Growth
(Annualised, constant 2012 prices)
(YoY)
1
Cambridge
9,340
1.4%
2
Oxford
8,506
1.2%
3
Milton Keynes
10,928
1.2%
4
Ipswich
4,547
1.0%
5
Norwich
6,183
1.0%
6
Bristol
13,737
0.9%
7
Peterborough
5,329
0.9%
8
Southampton
5,804
0.9%
9
Brighton
7,057
0.9%
10
Portsmouth
5,275
0.9%
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Derby
6,827
0.9%
12
Manchester
16,890
0.8%
13
Plymouth
5,087
0.8%
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Bournemouth
4,604
0.8%
15
Newcastle
9,256
0.8%
16
Aberdeen
11,679
0.7%
17
Coventry
7,545
0.7%
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Greater Manchester
58,919
0.7%
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Birmingham
24,462
0.7%
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City Growth Tracker update England’s South Coast Economy
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Powerhouse Table – The Year Ahead GVA continued 20
Nottingham
8,717
0.7%
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Glasgow
19,365
0.7%
22
Hull
5,031
0.7%
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Sheffield
11,098
0.7%
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Outer London
123,084
0.7%
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Leicester
7,342
0.7%
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Stoke-on-Trent
4,682
0.6%
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Sunderland
5,639
0.6%
28
Leeds
20,954
0.6%
29
Bradford
9,330
0.6%
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London
373,173
0.6%
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Edinburgh
18,118
0.6%
32
Liverpool
10,734
0.5%
33
Inner London
250,089
0.5%
34
Wolverhampton
4,520
0.5%
35
Cardiff
9,322
0.4%
36
Swansea
4,417
0.4%
37
Belfast
9,692
0.3%
38
Middlesbrough
3,305
0.3%
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Working together to unlock regional growth Irwin Mitchell has joined forces with the CBI to launch a new high-profile campaign which aims to reduce regional productivity differences and add £208 billion to the UK economy over the next decade. The ‘Unlocking Regional Growth’ report has used special access to ONS data to determine the main drivers of regional productivity differences across the UK. For further information and to view the report, visit www.cbi.org.uk/insight-and-analysis/unlocking-regional-growth Disclaimer Whilst every effort has been made to ensure the accuracy of the material in this document, neither Centre for Economics and Business Research Ltd (Cebr) nor the report’s authors will be liable for any loss or damages incurred through the use of the report. Authorship and acknowledgements This report has been produced by Cebr, an independent economics and business research consultancy established in 1992. The views expressed herein are those of the authors only and are based upon independent research by them. London, March 2017
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